Friday, December 11, 2015

Legal Proceedings and Repossessions in the Central Bank’s Mortgage Arrears Statistics

The release of the Q3 2015 update of the Central Bank’s arrears statistics garnered some attention for the continued reduction in the overall level of arrears.  The release also contains information on legal proceedings issued and concluded by lenders.

First we see that the number of legal proceedings issued declined in 2015.

The series jumped hugely after the lacuna in the law introduced by the Land and Conveyancing Law Reform Act 2009 was corrected by the Land and Conveyancing Law Reform Act 2013.  We can see the peak of over 3,000 legal proceedings issued per quarter was reached in the first half of 2014 while the figure for the most recent quarter is around 50 per cent of the peak.  Almost 22,000 legal proceedings for PDH properties have been issued since the middle of 2013.

Perhaps surprisingly, there has also been a slowdown in the number of court proceedings concluded.

The number of court orders granted for PDHs in the first three quarters of 2015 was 1,314.  Since the start of 2014, just over 5,000 legal proceedings have concluded and 2,300 (45 per cent) have concluded with a court order.  This tallies with observations of the proceedings in the Cork Circuit Court that more legal proceedings conclude by other means (mainly strike outs) than conclude with the granting of a possession order.

The outcome that is likely to be of most interest is the actual number of repossessions and this has increased significantly in 2015.

So far in 2015 there have been 564 court-ordered repossessions of PDHs carried out on behalf of lenders.  That is around 14 a week.  The figures suggest that around 40 per cent of possession orders are executed to give a court-ordered repossession.  It would be useful to know how many of these were vacant at the time the order was granted or were let out even though the original loan was for a PDH.

There are also occasions when lenders do not have to rely on a court order or executing a court order to take possession of a property.

While the number of court-ordered repossessions has increased in 2015 the number of voluntary surrenders has declined slightly.  In the first three quarters of 2014 there were 692 voluntary surrenders and this fell to 631 in 2015.   The statistics do not give the number of forced sales that occur though collecting data on “assisted voluntary sales” should be possible.

There are around 17,000 possession proceedings before the courts at the moment.  In rough terms, the aggregate data to date indicate that of these, around 45 per cent will conclude with the granting of a court order for possession and, of which again, around 40 per cent will lead to a court-ordered repossession.  That suggests there are around 7,500 orders for possession to come out of the courts with around 3,000 court-ordered repossessions following from those.

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